The NEM in 2035? It’ll look like this…

How do you expect the National Electricity Market to look by
about, oh, 2035? Probably very different from today, as a legion of new generation
sources replace a handful of grimy old coal plants. The supply side is only
going to get more complex, for sure, but don’t be complacent about demand.
There is the rise of electric vehicles and electrification of major household appliances
to factor in, for starters, not to mention the evolving role for batteries.

The slow reconfiguring of the NEM is a daunting task. How
can you arrive at a best-fit future-scenario solution when there is no way of
knowing what tomorrow will bring?

It’s a job for the boffins at the network service providers,
a few of whom joined a panel discussion in Sydney in February at the Pumped
Hydro Energy Storage Conference, chaired by ANU Centre for Sustainable Energy
Systems director Professor Andrew Blakers.

More interconnection

“The first thing that is crystal clear is that we need more
interconnection,” says AusNet Services head of infrastructure development Dennis
Freedman. More interconnection increases opportunities for storage and
generation in more locations, he says, which would help stabilise the grid. As
for the entrance of EVs, that’s a tough one. At this early stage we can only
guess what charging behaviour will look like. One thing is certain, if everyone
charges their vehicles on returning from work, grid operators will have a “massive
issue” on their hands as the ramp to evening peak demand becomes ever more
steep.

“The most critical thing is to plough our way through the
regulations and get as much of [AEMO’s] Integrated System Plan built as we can,”
Freedman says. “The benefits of that will far outweigh any cost of rushing into
things.”

The retirement of coal will leave a significant gap to be
filled in a 15-year span, says TasNetworks head of stakeholder relations,
community engagement, environment and planning approvals Ben White. “It’s a
challenging future – a huge spend – and the biggest question ultimately is what
is the impact to the customer, both as receiver of the service and payer of the
bills. How do you design a solution that provides the best customer outcome at
the lowest possible cost,” White says. “That’s our ultimate challenge.”

Demand side upside

Decarbonisation of the energy system also has significant
demand-side implications, says TransGrid future grid manager Fiona Orton. “Once
Australia gets past our high energy-cost challenges, Australia will be able to enjoy
low-cost energy into the future because we have excellent renewable resources, and
we have promising firming capabilities and technology options,” Orton says. “I
think that really opens up a whole new world of opportunities for
energy-intensive manufacturing. That’s a transformation we really haven’t
talked about very much.”

Orton says AEMO may see flat demand for the next 20 years
but TransGrid has a different view: economic growth in NSW and the rise of
electric vehicles will only see the load tick upwards, although there are positives
that some may have overlooked. “By 2040 we might have as much storage driving
around within Australia as the whole of the Snowy 2.0 project,” she says on the
possibilities of EVs as grid assets, where she sees so many more options about
how to balance intermittency of renewables and what services drivers of EVs
might be able to offer back to the network in a “two-way energy pathway”.

“I don’t think that demand side has really been taken into
account,” she says.

In her role Orton hears concerns about the reliability of
the ageing coal fleet and fields questions about back-up generation. She says
everyone in the market sees the retirement schedule for coal plants as
conservative, so the best plan is to move ahead with the energy transition at a
good clip – perhaps faster than has been considered. “That means the transition
becomes a lot more challenging, from our perspective.”

Blakers asked what are the prospects for “really serious” interconnections:
5GW to Townsville, 2GW across the desert to Perth, 4GW to South Australia. Will
it be planned for or built in a rush as generators fail unexpectedly?

Clever little connections

Taking off his AusNet hat for a moment, Freedman said he suspected
there would probably be more efficient ways to invest than “building a massive
freeway from one place to another”, such as using smaller interconnected lines that
created more opportunities for a larger array of generation and storage
facilities.

White, from TasNetworks, concurred. “It’s the tempering of
not overbuilding,” he says. “Every prudent transmission business is looking at the
next immediate value and opportunity.” The success of the Battery of the Nation
concept relies on lowest cost, most reliable, lowest emission-sourced energy being
connected to where it is needed most, “and we hope that results in more
interconnection between Tasmania and Victoria,” he says.

At TransGrid, Orton sees connection requests from wind and
solar developers but she’s well aware a “brand new technology” could come along
anytime and want to hook up where no-one had expected. “We need to be as
resilient as possible,” she says. “Different generators are likely to want to
connect in different locations over the next 20, 30 or 50 years. It’s hard to
predict the future when you’re trying to build in as much optionality as
possible.”

The good news is you don’t have to travel far from the
existing transmission corridors to find excellent wind and solar resources, she
says. “We’re interested in doing the cost-effective zones first.”

Policy, please…

Of course, all he panellists mentioned a longing for a strong
government mandate for an energy system transformation and decarbonisation.
Without this form of momentum in the sector it will be much harder to secure
multibillion-dollar projects.

As for satisfying load requirements, the next five years at
least will include some tentative moments. Even if tier one projects in the Integrated
System Plan were all approved quick-sticks, there is still a three-to-five-year
lag as easements and planning permits are negotiated. A lot could go wrong in
the meantime, which is why the connecting of the different states is so
important.

“It pretty disappointing that a crisis does precipitate a really
attractive business case to build out the infrastructure,” Orton says. “We love
to think we can plan and build the infrastructure before we have the crisis.”

State energy ministers seem to be largely on-side, however,
and the panellists appeared to share some inside knowledge which suggested a
year could probably be shaved off completion times for stage one projects in
the Integrated System Plan if it meant averting a crisis.